Few have been untouched by our financial crisis and our failing economy, but while exchange traded funds (ETFs) and Wall Street are getting hit, one mutual find giant may be getting the worst of it.
As of June 30, Fidelity had about $10 billion in the stocks of financial service firms that are now worthless, says Joe Morris for Ignites. There are some now-infamous names in there: AIG, Fannie Mae, Freddie Mac, Washington Mutual, Wachovia and Lehman Brothers.
What’s more, Fidelity’s investing disclosures for the second quarter suggest that it was betting on a financial recovery later this year. For example, it more than doubled its stake in Wachovia, and by quarter’s end was the No. 2 holder of Wachovia.
The Magellan fund held onto Wachovia in August, with $404 million of the bank’s stock. The fund also held AIG stock, and the insurer was Magellan’s seventh-biggest holding.
While it’s true that there are ETFs that have fallen off sharply in the financial crisis – especially those tracking indexes made up of banking stocks – investors at least always knew what was in them. It can’t be fun to get a quarterly disclosure that reads like a who’s who of our failed financial system.
We think missteps like these are going to help ETFs when the markets turn back around. Surprises might be fun sometimes, but there are some surprises people just don’t want.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.